Presented by Bill Schiemann Ph.D., founder and CEO of Metrus Group and currently serving as the Chairman of the SHRM Foundation Board.

1. Engagement of the Value ChainA Strategic Scorecard Approach Enterprise Engagement Alliance Networking Expo William Schiemann June 4, 2010

2. Topics Engagement and Strategy—Perfect Together! Engagement Beyond Employees Using Scorecards to Manage Potential Actions

3. What do we usually measure? Financial—revenue, profit Customer—retention, share of wallet Operations—cost, quality Sustainability—often neglected Supplier/partner—cost Employees—performance

4. Engagement is the Key Driver of Shareholder Equity Shareholder Equity Customer Engagement Employee Engagement Community & Environment Engagement Internal Service Engagement Supplier/Partner Engagement Engagement Drivers

5. Defining Engagement Goes beyond: Positive attitudes toward the organization Pride Satisfaction Job Commitment Intellectual and Emotional commitment leading to…

6. Engagement as Advocacy Willingness to: Put in additional discretionary effort (time, energy, thinking)? Perform prescribed tasks, provide more voluntary actions, and exhibit fewer proscribed behaviors Encourage people they value to: Work with this organization Support this organization and its products or services Invest in this organization (publicly traded)

7. Customer Engagement Engaged customers: Remain loyal, even… Increase share of wallet Tell their friends Disgruntled customers: Leave Tell 10 other people Stay and …

8. Brand Product/Service Relationship Major Drivers of Customer Engagement

9. Advocacy Commitment Satisfiers Major Drivers of Employee Engagement

10. Engagement Requires Two Partners PEOPLE EQUITY

11. Internal Service and BusinessPerformance - 2010 Metrus Institute/ASQ Research Metrus has tracked internal service since 1993, including through the recession. Percentage in Top BusinessPerformance Group

12. High vs. Low ACE Companies – Internal Service Over 50% Difference in Most Functions

13. Partner/Supplier Engagement Outsourcing and globalization have made partners a critical part of the value chain—it’s no longer just about the lowest cost How important was: Brake pedal supplier CTS to Toyota in 2010? Morton Thiokol to NASA? Transocean To BP Few corporations measure Supplier Engagement— a Best Practice differentiator

14. Community and Environment Community: Good neighbors make good employees, good customers, good investors Healthy Weight Commitment Foundation: remove more than 1 trillion calories by 2010, to reduce childhood obesity: why are Coke, Pepsi, Kraft and over 70 others participating? Environment: Engagement with the ecosystem has become recognized as a critical part of doing business, and a key aspect of many customer brands: BP claimed to be the ‘green’ energy company? Ortho Clinical Diagnostics committed 6 acres to solar panels as part of J&J’s 7% reduced carbon footprint commitment

15. Shareholder Engagement Investors are primarily focused on total return; engagement is not an issue Really? Why has Philip Morris changed its name to Altria? Why did Coke do an about-face on diversity and environmental issues? Why could Bolthouse attract investors to launch a more environmentally responsible beverage company? Why did many stock indices emerge that excluded South Africa during apartheid? Why are there stock indices that focus only on triple bottom line performers?

16. The Evidence for Engagement Towers Perrin: Most engaged Higher retention of best employees 19% increase in operating income (vs. 33% decline) 28% increase in EPS (vs. 11% decline) Caterpillar: Engagement initiatives $9M in savings due to turnover, absence, and overtime 80% fewer grievances Higher customer satisfaction Intuit: Engaged employees 1.3x more productive 5x less likely to leave Molson: Highly engaged 5x less likely: safety incident or lost time accident ($1.7M) Higher sales performance Vance, Robert J. Ph.D., Employee Engagement and Commitment, SHRM Foundation’s Effective Practice Guidelines, 2006

17. Impact of Low Engagement Low external or internal customer satisfaction Low productivity due to mediocre energy Top talent loss when market conditions permit Unmarketable employees retire in place Low referrals of new talent Weak customer retention and share of wallet Quality suffers Margins and revenue weaker

18. Sample Strategy Map: Financial Organization FINANCIAL OUTCOMES CUSTOMER DRIVERS CUSTOMER OUTCOMES COMMUNITY/SUPPLIER DRIVERS PEOPLE/OPERATIONS OUTCOMES Image - Stability - Reputation Employee Engagement Alignment - Performance Mgmt. - Rewards New Business Internal Customer Value Product Value - Speed - Accuracy Client Engagement Growth in Revenue Community Engagement - Environment Scans Growth in Net Income Knowledge - Service Skills - Analytical - Product Client Retention Relationship Mgmt - Responsiveness - Flexibility Productivity Supplier Engagement - Database Uptime - Supplier Engagement Index Cycle Time - Bids - Credit Information - Reports - Collections - Cash Applications Map Key: Supplier People Operations Customer Financial Community Copyright © 2005 Metrus Group, Inc

19. Engagement Must Be Viewed in Context A - Alignment C - Capabilities E - Engagement Red = Trouble Yellow = OK Green = Strength

20. What can you do NOW?! Clearly define the full value chain, and look at the impact of engagement on each link Ask first: how will the stakeholder benefit; the benefit to you will follow Implement metrics that detect engagement across the full value chain—look for strategic leading and lagging indicators Track regularly; coordinate with financial cycles

21. Thank You! William Schiemann wschiemann@metrus.com 908 231-1900, x101 www.metrus.com